FAQs real estate and business agents code of conduct 2016
Refer to our Code of Conduct page to view the Real Estate and Business Agents Code of Conduct.
Frequently asked questions in regards to the Real Estate and Business Agents and Sales Representatives Code of Conduct 2016.
A lot of the rules look different - what has changed?
The rules have been redrafted in line with modern legislative requirements and to ensure consistency with the other property industry codes and the Real Estate and Business Agents Act 1978. It is important to note that the duties and responsibilities of agents and sales representatives remain the same. Agents and sales representatives must:
- act in good faith and exercise due skill, care and diligence;
- act in the best interests of their clients; and
- be honest in their dealings with all persons involved in a transaction.
Do all offers, including verbal offers, have to be communicated to the client?
The new Code requires that “when acting for a client, an agent or sales representative must communicate each offer to the client as soon as practicable after the offer is made.”
This new rule does not mean that an agent or sales representative has to communicate all proposals from potential purchasers. For example, a statement about an intended course of action (“I hope to be able to put in an offer to buy this house soon”) is not an offer.
While you may consider that an offer (either written or verbal) may seem speculative or unrealistic and may not genuinely result in the sale of a property, for avoidance of any doubt, it should be presented to the client.
I thought sales contracts had to be in writing – what happens with a verbal offer?
A contract to sell land is unenforceable unless it is evidenced in writing. It would be prudent for an agent or sales representative to convey this information to their client if presenting a verbal offer, and would request that the potential purchaser put their offer in writing. The presentation of verbal offers is about providing clients with full transparency and allowing them to make more fully informed decisions about their property, not about settling property via verbal contracts.
The conflict of interest rule has been amended in the Code – why is this?
Section 64 of the Real Estate and Business Agents Act 1978 already requires that an agent shall not have, directly or indirectly, any interest, otherwise than in his capacity as an agent, in any transaction in which he acts or purports to act as agent, unless his principal (client) has given prior written consent. It’s not necessary, therefore, to repeat this in the Code.
The new Code requires that agents take reasonable steps to ensure that employees comply with applicable laws. What does this mean?
The agent who carries on a business will be required to do what is “reasonable” to ensure that their employees comply with the law applicable to the business. That is, laws that relate to the employee’s conduct and dealings with clients and customers in a real estate or business transaction. For example, an employer would be expected to take reasonable steps to ensure that their employees comply with the Australian Consumer Law 2010 (WA).
What is a fiduciary relationship?
A fiduciary relationship exists where someone holds a legal relationship of trust and confidence with one or more parties. Agents and sales representatives already owe a fiduciary duty to their client, as this arises under the relationship of trust and confidence between the agency and their client; however, this is now expressly stated in the new Code.
As an agent or sales representative is required to represent the interests of their client, they owe their client a duty to act with utmost loyalty and good faith and to avoid any conflict of interest.
Will I have to change my business practices because of the fiduciary duty rule?
No, you should not, as the fiduciary duty already applies. Agencies should already incorporate their fiduciary duty into their current business practices.
Is substantial attendance at the office still required?
An agent who carries on a business must still frequently attend the offices at which the business is carried out but is no longer required to personally manage the business full time. This change should provide greater flexibility to businesses and recognises that with technological advancements more flexible working arrangements are possible.
What do I do if I need to change a term or condition in the appointment to act?
Any change made to the terms or conditions of the appointment to act must be in writing and be accepted by all parties to the agreement. If a change is necessary, this could be contained in a new document endorsed by the client and the agency, or by having the change initialled by all parties on the original appointment to act.
The Code only mentions agents and sales representatives? Do property managers have to comply with the Code?
Yes, property managers also have to comply with the Code. Property managers are considered to be a type of sales representative, for the purpose of the Real Estate and Business Agents Act 1978 (REBA Act), limited to property management transactions only. Therefore, when the code refers to “sales representatives”, it includes property managers. In short, anyone licensed or registered under the REBA Act is bound by the Code.
Why has the term “principal” been replaced by “client”?
The Code’s language has been updated to make it easier to read and understand. The main change in terminology is to replace the term ‘principal’ with ‘client’, as the term client is more commonly understood. It appears there was some confusion as to whether ‘principal’ meant the client or the agent’s employer.
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